CTS Announces First Quarter 2021 Results

Strong Sales and Earnings despite challenging supply chain environment

Lisle, Illinois, UNITED STATES


LISLE, Ill., April 29, 2021 (GLOBE NEWSWIRE) -- CTS Corporation (NYSE: CTS) today announced first quarter 2021 results.

  • Sales were $128.4 million, up 25% year-over-year. Sales to transportation customers increased 23%, and sales to other end markets grew 27%. The Sensor Scientific acquisition added $1.8 million of sales in the first quarter of 2021.
  • Net earnings were $12.0 million or $0.37 per diluted share versus $3.8 million or $0.12 per diluted share in the first quarter of last year.
  • Adjusted diluted EPS was $0.46, up from $0.19 in the first quarter of 2020.
  • Free cash flow was $18.5 million, up from $7.4 million in the first quarter of 2020.
  • New business wins were $156 million.

“We achieved strong results in the quarter supported by robust customer demand. I am proud of our global teams for their performance despite significant supply chain headwinds,” said Kieran O’Sullivan, CEO of CTS Corporation. “Our recently acquired business, Sensor Scientific, performed well in the quarter. Our strategic focus is on organic growth and to leverage our strong balance sheet for key acquisitions to drive long term shareholder value.”

2021 Guidance

Management remains mindful of supply chain uncertainties in this pandemic environment and is updating its 2021 guidance for sales from $430 – $490 million to $445 – $500 million, and for adjusted earnings per diluted share from $1.20 – $1.60 to $1.35 – $1.70.

Conference Call

As previously announced, the Company has scheduled a conference call at 10:00 a.m. (EST) today to discuss the first quarter financial results. The dial-in number is 888-207-0293 (334-323-9869, if calling from outside the U.S.). The passcode is 303804. There will be a replay of the conference call available from 1:00 p.m. (EST) on Thursday, April 29, 2021 through 1:00 p.m. (EST) on Thursday, May 13, 2021. The telephone number for the replay is 888-203-1112 (719-457-0820, if calling from outside the U.S.). The replay passcode is 1559327. A live audio webcast of the conference call will be available and can be accessed directly from the Investors section of the website of CTS Corporation at www.ctscorp.com.

About CTS

CTS (NYSE: CTS) is a leading designer and manufacturer of products that Sense, Connect, and Move. The company manufactures sensors, actuators, and electronic components in North America, Europe, and Asia, and provides engineered products to customers in the aerospace/defense, industrial, medical, telecommunications/IT, and transportation markets.

For more information, visit www.ctscorp.com.

Safe Harbor

This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. Forward-looking statements are based on management's expectations, certain assumptions and currently available information. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the forward-looking statements. Many of these, and other, risks and uncertainties are discussed in further detail in Item 1A. of CTS’ Annual Report on Form 10-K. We undertake no obligation to publicly update our forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

Contact

Ashish Agrawal
Vice President and Chief Financial Officer
CTS Corporation
4925 Indiana Avenue
Lisle, IL 60532
USA
Telephone: +1 (630) 577-8800
E-mail: ashish.agrawal@ctscorp.com



CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands of dollars, except per share amounts)

  Three Months Ended 
  March 31,
2021
  March 31,
2020
 
Net sales $128,427  $103,075 
Cost of goods sold  85,836   70,176 
Gross margin  42,591   32,899 
Selling, general and administrative expenses  18,325   16,759 
Research and development expenses  5,687   7,408 
Restructuring charges  81   240 
Operating earnings  18,498   8,492 
Other (expense) income:        
Interest expense  (555)  (851)
Interest income  202   331 
Other expense, net  (3,356)  (1,982)
Total other expense, net  (3,709)  (2,502)
Earnings before income taxes  14,789   5,990 
Income tax expense  2,799   2,182 
Net earnings $11,990  $3,808 
Earnings per share:        
Basic $0.37  $0.12 
Diluted $0.37  $0.12 
Basic weighted – average common shares outstanding:  32,319   32,466 
Effect of dilutive securities  301   327 
Diluted weighted – average common shares outstanding:  32,620   32,793 
Cash dividends declared per share $0.04  $0.04 



CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)

  (Unaudited)     
  March 31,
2021
  December 31,
2020
 
ASSETS        
Current Assets        
Cash and cash equivalents $103,392  $91,773 
Accounts receivable, net  81,571   80,981 
Inventories, net  47,558   45,870 
Other current assets  14,115   14,607 
Total current assets  246,636   233,231 
Property, plant and equipment, net  94,848   97,437 
Operating lease assets, net  23,620   23,281 
Other Assets        
Prepaid pension asset  56,502   56,642 
Goodwill  109,468   109,497 
Other intangible assets, net  76,931   79,121 
Deferred income taxes  24,192   24,250 
Other  2,468   2,590 
Total other assets  269,561   272,100 
Total Assets $634,665  $626,049 
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current Liabilities        
Accounts payable $53,315  $50,489 
Operating lease obligations  3,271   3,294 
Accrued payroll and benefits  12,688   12,978 
Accrued expenses and other liabilities  37,436   38,171 
Total current liabilities  106,710   104,932 
Long-term debt  50,000   54,600 
Long-term operating lease obligations  23,510   23,163 
Long-term pension obligations  7,290   7,466 
Deferred income taxes  6,892   7,010 
Other long-term obligations  4,547   5,196 
Total Liabilities  198,949   202,367 
Commitments and Contingencies        
Shareholders’ Equity        
Common stock  313,008   311,190 
Additional contributed capital  39,616   41,654 
Retained earnings  549,977   539,281 
Accumulated other comprehensive loss  (94,363)  (95,921)
Total shareholders’ equity before treasury stock  808,238   796,204 
Treasury stock  (372,522)  (372,522)
Total shareholders’ equity  435,716   423,682 
Total Liabilities and Shareholders’ Equity $634,665  $626,049 



CTS CORPORATION AND SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION - UNAUDITED

Earnings Per Share

The following table reconciles GAAP diluted earnings per share to adjusted diluted earnings per share for the Company:

  Three Months Ended 
  March 31,
2021
  March 31,
2020
 
GAAP diluted earnings per share $0.37  $0.12 
Tax affected charges to reported diluted earnings per share:        
Foreign currency loss 0.04   0.04 
Non-cash pension expense 0.04   0.01 
Environmental charges 0.01    
Discrete tax items     0.02 
Adjusted diluted earnings per share $0.46  $0.19 


Free Cash Flow

The following table reconciles GAAP operating cash flow to free cash flow for the Company:

  Three Months Ended 
(in thousands) March 31,
2021
  March 31,
2020
 
Net cash provided by operating activities $20,110  $11,927 
Capital expenditures  (1,638)  (4,570)
Free cash flow $18,472  $7,357 


Additional Information

The following table includes other financial information not presented in the preceding financial statements.

  Three Months Ended 
(in thousands) March 31,
2021
  March 31,
2020
 
Depreciation and amortization expense $6,800  $6,532 
Stock-based compensation expense $1,219  $228 


Non-GAAP Financial Measures

Adjusted earnings per share is a non-GAAP financial measure. The most directly comparable GAAP financial measure is diluted earnings per share.

CTS adjusts for these items because they are discrete events, which have a significant impact on comparable GAAP financial measures and could distort an evaluation of our normal operating performance.

CTS uses an adjusted earnings per share measure to evaluate overall performance, establish plans and perform strategic analysis. Using this measure avoids distortion in the evaluation of operating results by eliminating the impact of events which are not related to normal operating performance. Because this measure is based on the exclusion or inclusion of specific items, they may not be comparable to measures used by other companies which have similar titles. CTS' management compensates for this limitation when performing peer comparisons by evaluating both GAAP and non-GAAP financial measures reported by peer companies. CTS believes that this measure is useful to its management, investors and stakeholders in that it:

  • provides a meaningful measure of CTS' operating performance,
  • reflects the results used by management in making decisions about the business, and
  • helps review and project CTS' performance over time.

Free cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net cash provided by operating activities. CTS believes free cash flow is a useful measure of its ability to generate cash.

We recommend that investors consider both actual and adjusted measures in evaluating the performance of CTS with peer companies.